Michigan Vehicle Sales Tax & Fees [+ Calculator]
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It’s exciting to buy a new (or new for you) car, but it’s also far from cheap.
Things like sales tax and other fees are often forgotten about in the excitement of making a new car purchase. But in Michigan, you’ll need to be prepared to spend additional money on these extra costs.
Here’s what to expect when it comes to taxes and fees in the state of Michigan.
Table of Contents
- How Much Is the Car Sales Tax in Michigan?
- How to Calculate Michigan Sales Tax on a Car
- Michigan Car Sales Tax Calculator
- Do I Have to Pay Sales Tax on a Used Car?
- Which County Has the Highest Tax? Which Has the Lowest?
- Car Sales Tax for Trade-Ins in Michigan
- Car Sales Tax on Private Sales in Michigan
- Tax on Rebates & Dealer Incentives
- Michigan DMV/State Fees
- When Sales Tax Is Exempt in Michigan
- Michigan EV Rebates & Incentives
- Best Car Deals by Category
- Frequently Asked Questions
How Much Is the Car Sales Tax in Michigan?
The car sales tax in Michigan is 6%. Michigan is one of the few states that do not have any additional local or county tax. All tax rates in Michigan are at 6%.
As an example, if you were to purchase a new SUV at a purchase price of $25,000, then you will have to pay an additional $1,500 in sales tax.
How to Calculate Michigan Sales Tax on a Car
You can calculate the sales tax in Michigan by multiplying the final purchase price by .06%.
For example, let’s say that you want to purchase a new car for $30,000, you would use the following formula to calculate the sales tax:
$30,000 x.06 = $1,800
This means that your sales tax is $1,800 on a $30,000 purchase price.
Calculate Car Sales Tax in Michigan Example:
- Initial Car Price: $30,000
- Sales Tax Rate: 6%
- Trade-In Amount: $5,000
- Dealer Rebate: $2,000
- Manufacturer Rebate: $3,000
Sales Tax = ($30,000 - $5,000 - $2,000) * .06
Sales Tax = $1,380
Remember that the total amount you pay for a car (out the door price) not only includes sales tax, but also registration, and dealership fees.
Michigan Car Sales Tax Calculator
Do I Have to Pay Sales Tax on a Used Car?
The sales tax is the same 6% on a used vehicle.
For example, if you were to purchase a used car for $15,000, then you will have to pay an additional $900 in sales tax.
Which County Has the Highest Tax? Which Has the Lowest?
Michigan is one of the few states that does not have any local or county sales tax, therefore all counties have the same tax rate of 6%.
Car Sales Tax for Trade-Ins in Michigan
You don’t have to pay sales tax on trade-ins in Michigan. In other words, be sure to subtract the trade-in amount from the car price before calculating sales tax.
As an example, let’s say you are purchasing a new SUV for $25,000 and your trade-in is worth $5,000. You will subtract the trade-in value by the purchase price and get $20,000. Therefore, your car sales tax will be based on the $20,000 amount.
It's important to note that the maximum tax credit you can get for a trade-in is $8,000 as of January 1st, 2022. For example, if you traded in a car that is valued at $10,000 you can only deduct up to $8,000 from the purchase price when calculating sales tax. This amount will increase every year until it hits a maximum of $14,000.
Car Sales Tax on Private Sales in Michigan
A sales tax is required on all private vehicle sales in Michigan.
As an example, if you purchase a truck from a private party for $10,000, then you will pay 6% of that amount to the Michigan DMV.
Tax on Rebates & Dealer Incentives
You do not have to pay tax on dealer rebates in Michigan. In other words, be sure to subtract the dealer rebate amount from the car price before calculating sales tax.
As an example, if you are purchasing a new car for $30,000 with a $5,000 rebate, you will pay sales tax on the $25,000 cost of the car.
However, the same does not apply to manufacturer rebates in Michigan. You must pay tax on manufacturer rebates, or in other words, do not subtract the manufacturer rebate amount from the car price when calculating sales tax.
Michigan DMV/State Fees
There are some other state and DMV fees associated with the purchase of a vehicle in Michigan.
A few of these fees include:
- Registration Fee: $15
- Title Fee: $15
- Plate Transfer Fee: $10
Michigan Dealership Fees
Dealerships apply extra fees, sometimes referred to as “doc fees,” with the sale of the car.
Though these fees vary based on the dealership, the average fee in Michigan is $165, with a limit of $230 or 5% of the purchase price on how much dealerships can charge.
When Sales Tax Is Exempt in Michigan
There are a few scenarios where sales tax is exempt:
- Vehicle is titled in the name of a federal credit union
- Out-of-state dealers buying a vehicle from a Michigan dealer
- When a dealer titles a demo car
- If you are a foreign diplomat
- Transferring the vehicle to a relative (excludes aunt, uncle, cousins, nieces, nephews, and former spouses)
Michigan EV Rebates & Incentives
There is no current EV rebate in the state of Michigan. However, there is a recent proposal to allow a $2,000 rebate on EV sales.
In addition, EVs purchased in the state are eligible for the $7,500 federal EV rebate.
Tax information and rates are subject to change, please be sure to verify with your local DMV.
